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Accounting Policies of Precot Meridian Ltd. Company

Mar 31, 2015

A. Accounting Convention

The financial statements have been prepared to comply in all material respects with the accounting standards specified under section 133 of the Companies Act read with rule 7 of the companies (Accounting Standards) Rules, 2014 and the relevant provisions of the companies Act, 2013. The financial statements have been prepared under the historical cost convention on an accrual basis. This accounting policy has been consistently applied by the company with those used in the previous year, except for the change in accounting policy as specified in note no 2.34 of the financial statement.

b. Use of Estimates

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported balances of Assets and Liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, employees' retirement benefit plan, provision for income and other taxes, useful life of fixed assets, etc. Actual results could differ from the estimates made. Any revision to accounting estimates is recognized prospectively in the year in which the events are materialized.

c. Fixed Assets

Fixed assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation, accumulated amortisation and cumulative impairment if any. Costs include preoperative expenses and all expenses related to acquisition and installation of the assets concerned.

d. Borrowing Costs

Borrowing costs attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. All the other borrowing costs are charged to revenue. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

e. Impairment of Assets

As at each balance sheet date, the carrying amount of assets is tested for impairment so as to determine

i) the provision for impairment loss, if any, required or

ii) the reversal, required of impairment loss recognised in previous periods, if any impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

f. Depreciation

Depreciation is provided on straight line method based on the useful life as Specified in schedule II of the Companies Act, 2013, except in respect of plant and machinery where the useful life estimated to be 20 years (10 years on triple shift basis) based on technical assessment.

g. Investments

a. Long Term Investments are stated at cost.

b. Provision for diminution in value of long-term investments is made, if the diminution is other than temporary.

h. Inventories

a) Inventories are valued at lower of cost and estimated net realizable value.

b) The basis of determining cost for various categories of inventories are as follows:-

I) Raw Materials, Packing Materials & Stores and Spares: Weighted average basis.

ii) Finished Goods and Goods-In-Process: Cost of Direct Material, Labour & Other Manufacturing Overheads.

i. Foreign Currency Transactions

i) Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

ii) Monetary assets and monetary liabilities at the year-end are realigned at the exchange rate prevailing at the year- end and the difference on realignment is recognized in the statement of Profit and Loss or fixed assets as the case may be.

j. Revenue Recognition

i) The company follows the mercantile system of accounting and recognizes income and expenditure on an accrual basis except those with significant uncertainties.

ii) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods.

iii) Domestic sales as reported in the statement of profit and loss are exclusive of tax/duties, if any, and trade discounts. Income from export entitlements is accounted as and when the certainty of entitlement is determined.

iv) Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

v) Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

k. Taxes on Income

i) Current Tax on income is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.

ii) Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the balance sheet date. Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets on business loss and unabsorbed depreciation are recognized and carried forward to the extent that there is virtual certainty that sufficient taxable income will be available against which such deferred tax asset can be realised.

iii) Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.

l. Employee Benefits

i) Short-term employee benefits are recognised as an expense at the un-discounted amount in the statement of profit and loss of the year in which the related service is rendered.

ii) Post employment and other long term benefits which are defined benefit plans are recognised as an expense in the statement of profit and loss for the year in which the employee has rendered service. The expense is recognised based on the present value of the obligation determined in accordance with Revised Accounting Standard 15 on 'Employee Benefits'. Actuarial gains & losses are charged to the statement of profit and loss.

iii) Payments to defined contribution schemes are charged as expense as and when incurred.

iv) Termination benefits are recognised as an expense as and when incurred.

m. Government grants and subsidies

Grants and subsidies from the government are recognised when there is a reasonable assurance that the grant / subsidy will be received and all attached conditions will be complied with. Grant related to specific fixed assets are presented in the Balance sheet by showing such grant as deduction from the fixed asset concerned. Grants received in the nature of promoters contribution is credited to capital reserve and treated as a part of shareholders' fund. Grant in relation to reimbursement of expenditure are credited to the natural head of expenditure to which the grant relate.

n. Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred. Intangible assets are amortized on a straight line basis over the estimated useful economic life.

o. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share shareholders (after deducting preference dividends and attributable taxes if any) by the weighted average number of equity shares outstanding during the period. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and consolidation of shares if any. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

p. Cash and cash equivalents

Cash flow are reported using the indirect method, where by net profit before tax is adjusted for the effects of transaction of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow comprises regular revenue generating, investing and financing activities of the company. Cash and cash equivalents in the balance sheet comprise of cash at bank and in hand and short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

q. Provisions and contingent liabilities

A provision is recognized if, as a result of a past event, the company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability.

A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.




Mar 31, 2014

A. Accounting Convention:

i) The financial statements have been prepared to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act. The financial statements have been prepared under the historical cost convention on an accrual basis. The accounting policies are consistent with those used in the previous year.

ii) Pursuant to Institute of Chartered Accountants of India (ICAI) announcement regarding early adoption of Accounting Standard 30 "Financial Instruments - Recognition and Measures" the company has adopted the standard with effect from 01.04.2008.

b. Use of Estimates

The preparation of financial statements requires the management of the company to make estimates and assumptions that affect the reported balances of Assets and Liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the year. Examples of such estimates include provision for doubtful debts, employees'' retirement benefit plan, provision for income and other taxes, useful life of fixed assets, etc. Actual results could differ from the estimates made. Any revision to accounting estimates is recognized prospectively in the year in which the events are materialized.

c. Fixed Assets:

Fixed Assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation, accumulated amortisation and cumulative impairment if any. Costs include preoperative expenses and all expenses related to acquisition and installation of the assets concerned.

d. Borrowing Costs:

Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. All the other borrowing costs are charged to revenue. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

e. Impairment of Assets:

As at each Balance sheet date, the carrying amount of assets is tested for impairment so as to determine

i) the provision for impairment loss, if any, required or

ii) the reversal, required of impairment loss recognised in previous periods, if any impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

f. Depreciation:

Depreciation is provided on the Straight Line Method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Intangible Assets are amortised over a period of five years.

g. Investments:

Investments are stated at fair value as per relevant accounting standard followed by the company. Provision for diminution in value of long-term investments is made, if the diminution is other than temporary.

h. Inventories:

a) Inventories are valued at lower of cost and estimated net realizable value.

b) The basis of determining cost for various categories of inventories are as follows:-

i) Raw Materials, Packing Materials & Stores and Spares: Weighted average basis.

ii) Finished Goods and Goods-In-Process: Cost of Direct Material, Labour & Other Manufacturing Overheads.

i. Foreign Currency Transactions:

i) Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

ii) Monetary assets and Monetary liabilities at the year-end are realigned at the exchange rate prevailing at the year-end and the difference on realignment is recognized in the statement of Profit and Loss or fixed assets as the case may be.

j. Hedge Accounting:

Changes in the fair value of a derivative hedging instrument that qualify for hedge accounting as per the principles of hedge accounting and designated as a cash flow hedge are recognised as hedge reserve and presented within reserves and surplus, to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the statement of profit and loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold or terminated then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in hedge reserve, is retained in the hedge reserve until the forecast transaction occurs. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time is recognised in the statement of profit and loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in hedge reserve is immediately transferred to the statement of profit and loss.

j. Revenue Recognition:

i) The Company follows the mercantile system of accounting and recognizes Income and Expenditure on an accrual basis except those with significant uncertainties.

ii) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods.

iii) Domestic sales as reported in the statement of profit and loss are exclusive of tax/duties, if any, and trade discounts.

Income from Export entitlements is accounted as and when the certainty of entitlement is determined. Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

k. Taxes on Income:

i) Current Tax on income is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments / appeals.

ii) Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax assets on business loss and unabsorbed depreciation are recognized and carried forward to the extent that there is virtual certainty that sufficient taxable income will be available against which such deferred tax asset can be realised.

iii) Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in guidance note issued by the Institute of Chartered Accountants of India, the said asset is created by way of a credit to the statement of profit and loss and shown as MAT credit entitlement. The company reviews the same at each balance sheet date and writes down the carrying amount of MAT credit entitlement to the extent there is no longer convincing evidence to the effect that company will pay normal income tax during the specified period.

m. Employee Benefits:

i) Short-term employee benefits are recognised as an expense at the un-discounted amount in the statement of profit and loss of the year in which the related service is rendered.

ii) Post employment and other long term benefits which are defined benefit plans are recognised as an expense in the statement of profit and loss for the year in which the employee has rendered service. The expense is recognised based on the present value of the obligation determined in accordance with Revised Accounting Standard 15 on ''Employee Benefits''. Actuarial gains & losses are charged to the statement of profit and loss.

iii) Payments to defined contribution schemes are charged as expense as and when incurred.

iv) Termination benefits are recognised as an expense as and when incurred.

n. Government grants subsidies:

Grants and subsidies from the government are recognised when

there is a reasonable assurance that the grant / subsidy will be received and all attached conditions will be complied with. Grant related to specific fixed assets are presented in the Balance sheet by showing such grant as deduction from the fixed asset concerned. Grants received in the nature of promoters contribution is credited to capital reserve and treated as a part of shareholders''fund.

o. Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the statement of profit and loss in the year in which the expenditure is incurred. Intangible assets are amortized on a straight line basis over the estimated useful economic life, which is generally five years.

p. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity share shareholders (after deducting preference dividends and attributable taxes if any) by the weighted average number of equity shares outstanding during the period. The weighted average numbers of equity shares outstanding during the period are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and consolidation of shares if any. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

q. Cash and cash equivalents

Cash flow are reported using the indirect method, where by net profit before tax is adjusted for the effects of transaction of a non cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flow comprises regular revenue generating, investing and financing activities of the company. Cash and cash equivalents in the balance sheet comprise of cash at bank and in hand and short term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

r. Provisions and contingent liabilities

A provision is recognized if, as a result of a past event, the company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability.

A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

i) Terms/rights attached to equity shares :

The company has only one class of issued shares referred to as equity shares having a par value of Rs. 10 each. Each holder of equity shares is entitled to one vote per share. The dividend (except in case of interim dividend) proposed by the Board of Directors, if any, is subject to the approval of shareholders in the Annual General Meeting.

1. a) Term loan from SBI, ICICI, Andhra Bank, Export Import Bank of India and IDBI Bank are secured byway of pari passu first charge on entire movable and immovable assets of the company and pari passu second charge on current assets of the company.

b) Term loan from IDBI Bank, Dubai Branch is secured by way of exclusive first charge on the windmills and related equipments, systems and assets located at Eragampatti and Manurpalayam Village in Tirupur district.

2. In respect of the above, Rupee Term Loans carry interest ranging from 8.5% p.a. to 13.61% p.a. and Foreign Currency Term Loans carry interest ranging from 1.85% p.a. to 3.27% p.a. plus applicable LIBOR.

3. Term loan from ICICI Bank for Rs. 12,000 Lacs is secured by way of exclusive first charge on the assets of the Technical Textile unit at Hassan, Karnataka and Second charge on the entire moveable fixed asset of the unit at Hassan, ranking pari passu charge with ICICI bank''s derivative limits for the unit at Hassan.

4. The outstanding balance of:

Rupee term loan of Rs. 2062.50 Lacs fromAndhraBankis repayable in 11 equal quarterly installments. Rupee Tuf loan - III of Rs. 45.00 Lacs from ICICI Bank is repayable in 2 equal quarterly installments. Rupee Tuf loan - IV of Rs. 66.50 Lacs from IDBI Bank is repayable in 7 equal quarterly installments. Rupee Tuf loan - VII of Rs. 132.00 Lacs from ICICI Bank is repayable in 2 equal quarterly installments. Rupee Tuf loan -VIII of Rs. 300.00 Lacs from IDBI Bank is repayable in 5 equal quarterly installments. Rupee Tuf loan-IX of Rs. 453.33 Lacs from EXIM Bank is repayable in 11 equal quarterly installments. Rupee Tuf loan - X of Rs. 1301.97 Lacs from EXIM Bank is repayable in 13 equal quarterly installments.

Rupee Tuf loan - XI of Rs. 1618.75 Lacs from EXIM Bank is repayable in 23 quarterly installments of varying amounts.

Rupee Tuf loan - XII of Rs. 3160.13 Lacs from SBI is repayable in 17 quarterly installments of varying amounts.

Rupee Tuf loan XIII of Rs. 12000.00 Lacs from ICICI Bank is repayable in 11 half yearly installments of varying amounts commencing from July 2014.

Rupee Tuf Loan - XIV of Rs. 1500.00 Lacs from EXIM Bank is repayable in 20 equal quarterly installments commencing from September 2015.

Foreign Currency loan from ICICI Bank of USD 8.18 Lacs is repayable in 1 last installment falling due in first half of FY 2014-15.

Foreign Currency loan from IDBI Bank of USD 12.60 Lacs is repayable in 4 equal half yearly installments.

Deferred Sales tax loan of Rs. 40.04 Lacs is repayable in 6 monthly instalments of varying amounts.

1. Working capital loans from SBI, Andhra Bank, Corporation Bank, IDBI,ICICI,Yes Bank and The South Indian Bank are secured by way of pari passu first charge on current assets of the company and pari passu second charge on entire immovable assets of the company.

2. In respect of the above, working capital rupee loans carry interest ranging from 10.45% p.a. to 14.85% p.a. and working capital foreign currency loans carry interest ranging from 1.95% p.a. to 3.30% p.a. plus applicable LIBOR.

3. Unsecured short term loans from Axis Bank & IDBI Bank carrry interest in the range of 10.25% to 10.50% p.a. Further the company has extended a corporate guarantee for the loan from Axis Bank.

Based on the information and evidence available with the company, there are no dues to Micro, Small and Medium enterprises, outstanding as on 31st March 2014 (31st March 2013 : Nil) and there are no interest payable on belated payments to these enterprises. The disclosure is based on the information available with the company and relied upon by the auditors.


Mar 31, 2012

A. Accounting Convention :

The financial statements have been prepared as per Section 211(3C) of the Companies Act, 1956 and a recommendatory standard issued by the Institute of Chartered Accountants of India. Pursuant to Institute of Chartered Accountants of India (ICAI) announcement regarding early adoption of AS 30 "Financial Instruments - Recognition and Measurement" the company has adopted the standard with effect from 01.04.2008.

b. Fixed Assets :

Fixed Assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation, accumulated amortisation and cumulative impairment if any. Costs include preoperative expenses and all expenses related to acquisition and installation of the assets concerned.

c. Leases :

Assets leased out under operating leases are capitalized. Rental income is recognised on accrual basis over the lease term.

d. Borrowing Costs :

Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. All the other borrowing costs are charged to revenue. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

e. Impairment of Assets :

As at each Balance sheet date, the carrying amount of assets is tested for impairment so as to determine

a) the provision for impairment loss, if any, required or

b) the reversal, required of impairment loss recognised in previous periods, if any, impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

f. Depreciation :

Depreciation is provided on the Straight Line Method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Intangible Assets are amortised over a period of five years.

g. Investments :

Investments are stated at fair value as per relevant accounting standard followed by the company. Provision for diminution in value of long-term investments is made, if the diminution is other than temporary.

h. Inventories :

a) Inventories are valued at lower of cost and estimated net realizable value.

b) The basis of determining cost for various categories of inventories are as follows:-

i) Raw Materials, Packing Materials & Stores and Spares: Weighted average basis.

ii) Finished Goods and Goods-In-Process: Cost of Direct Material, Labour & Other Manufacturing Overheads.

i. Foreign Currency Transactions:

a) Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

b) Monetary assets and Monetary liabilities at the year-end are realigned at the exchange rate prevailing at the year-end and the difference on realignment is recognized in the Profit and Loss Account or fixed assets as the case may be.

j. Revenue Recognition:

a) The company follows the mercantile system of accounting and recognises income and expenditure on accrual basis except those with significant uncertainties.

b) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods.

c) Domestic sales as reported in the profit and loss account are exclusive of tax/duties, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined.

d) Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

k. Taxes on Income:

a) Current Tax on income is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.

b) Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

I. Employee Benefits:

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

b) Post employment and other long term benefits which are defined benefit plans are recognised as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognised based on the present value of the obligation determined in accordance with Revised Accounting Standard 15 on 'Employee Benefits'. Actuarial gains & losses are charged to the profit and loss account.

c) Payments to defined contribution schemes are charged as expense as and when incurred.

d) Termination benefits are recognised as an expense as and when incurred.


Mar 31, 2011

1. Accounting Convention :

The financial statements have been prepared as per Section 211(3C) of the Companies Act, 1956 and a recommendatory standard issued by the Institute of Chartered Accountants of India.

Pursuant to Institute of Chartered Accountants of India (ICAI) announcement regarding early adoption of AS 30 "Financial instruments - Recognition and Measurment" the company has adopted the standard with effect from 01.04.2008.

2. Fixed Assets :

Fixed Assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation, accumulated amortisation and cumulative impairment if any. Costs include preoperative expenses and all expenses related to acquisition and installation of the assets concerned.

3. Leases :

Assets leased out under operating leases are capitalized. Rental income is recognised on accrual basis over the lease term.

4. Borrowing Costs :

Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. All the other borrowing costs are charged to revenue. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

5. Impairment of Assets :

As at each Balance sheet date, the carrying amount of assets is tested for impairment so as to determine

a) the provision for impairment loss, if any, required or

b) the reversal, required of impairment loss recognised in previous periods, if any.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

6. Depreciation :

Depreciation is provided on the Straight Line Method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Intangible Assets are amortised over a period of five years.

7. Investments :

Investments are stated at fair value as per relevant accounting standard followed by the company. Provision for diminution in value of long-term investments is made, if the diminution is other than temporary.

8. Inventories :

a) Inventories are valued at lower of cost and estimated net realizable value.

b) The basis of determining cost for various categories of inventories are as follows:-

i) Raw Materials, Packing Materials & Stores and

Spares : Weighted average basis. ii) Finished Goods and Goods-In-Process: Cost of

Direct Material, Labour & Other Manufacturing Overheads.

9. Foreign Currency Transactions:

a) Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

b) Monetary assets and Monetary liabilities at the year- end are realigned at the exchange rate prevailing at the year-end and the difference on realignment is recognized in the Profit and Loss Account or fixed assets as the case may be.

10. Revenue Recognition:

a) The company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

b) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods.

c) Domestic sales as reported in the profit and loss account are exclusive of tax/duties, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined.

d) Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

11. Taxes on Income :

a) Current Tax on income is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.

b) Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

12. Employee Benefits:

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

b) Post employment and other long term benefits which are defined benefit plans are recognised as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognised based on the present value of the obligation determined in accordance with Revised Accounting Standard 15 on 'Employee Benefits'. Actuarial gains & losses are charged to the profit and loss account.

c) Payments to defined contribution schemes are charged as expense as and when incurred.

d) Termination benefits are recognised as an expense as and when incurred.


Mar 31, 2010

1. Accounting Convention :

The financial statements have been prepared as per Section 211 (3C) of the Companies Act, 1956 and a recommendatory standard issued by the institute of chartered accountants of india.

Pursuant to Institute of Chartered Accountants of India (ICAI) announcement regarding early adoption of Accounting Standard 30 Financial instruments, the company has early adopted the standard with effect from 01.04.2008.

2. Fixed Assets :

Fixed Assets are stated at original cost net of tax/duty credits availed, if any, less accumulated depreciation, accumulated amortisation and cumulative impairment if any. Costs include preoperative expenses and all expenses related to acquisition and installation of the assets concerned.

3. Leases :

Assets leased out under operating leases are capitalized. Rental income is recognised on accrual basis over the lease term.

4. Borrowing Costs :

Borrowing Costs attributable to the acquisition or construction of qualifying assets are capitalized as part of such assets. All the other borrowing costs are charged to revenue. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

5. Impairment of Assets :

As at each Balance sheet date, the carrying amount of assets is tested for impairment so as to determine

a) the provision for impairment loss, if any, required or

b) the reversal, if any, required of impairment loss recognised in previous periods.

Impairment loss is recognised when the carrying amount of an asset exceeds its recoverable amount.

6. Depreciation :

Depreciation is provided on the Straight Line Method in the manner and at the rates specified in Schedule XIV to the Companies Act, 1956. Intangible Assets are amortised over a period of five years.

7. Investments :

Investments are stated at fair value as per relevant accounting standard followed by the company. Provision for diminution in value of long-term investments is made, if the diminution is other than temporary.

8. Inventories :

a) Inventories are valued at lower of cost and estimated net realizable value.

b) The basis of determining cost for various categories of inventories are as follows:-

i) Raw Materials, Packing Materials & Stores and

Spares : Weighted average basis. ii) Finished Goods and Goods-In-Process: Cost of

Direct Material, Labour & Other Manufacturing

Overheads.

9. Foreign Currency Transactions :

a) Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transaction.

b) Monetary assets and Monetary liabilities at the year- end are realigned at the exchange rate prevailing at the year-end and the difference on realignment is recognized in the Profit and Loss Account or fixed assets as the case may be.

10. Revenue Recognition:

a) The company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis except those with significant uncertainties.

b) Sale of goods is recognised when the risk and rewards of ownership are passed on to the customers, which is generally on dispatch of goods.

c) Domestic sales as reported in the profit and loss account are exclusive of tax/duties, if any, and trade discounts. Income from Export entitlements is accounted as and when the certainty of entitlement is determined.

d) Dividend income is recognised when the right to receive the dividend is unconditional at the balance sheet date.

11. Taxes on Income :

a) Current Tax on income is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act 1961, and based on the expected outcome of assessments/appeals.

b) Deferred tax is recognised on timing differences between the accounting income and the taxable income for the year, and quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.

Deferred tax assets are recognised and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. 12.Employee Benefits:

a) Short-term employee benefits are recognised as an expense at the undiscounted amount in the profit and loss account of the year in which the related service is rendered.

b) Post employment and other long term benefits which are defined benefit plans are recognised as an expense in the profit and loss account for the year in which the employee has rendered service. The expense is recognised based on the present value of the obligation determined in accordance with Revised Accounting Standard 15 on Employee Benefits. Actuarial gains & losses are charged to the profit and loss account.

c) Payments to defined contribution schemes are charged as expense as and when incurred.

d) Termination benefits are recognised as an expense as and when incurred.



 
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